An insight into Bulgarian bioenergy – Nikolay Kakanakov

Since 2015, AEBIOM is involved in an innovative EU project called “Sustainable Regional Supply Chains for Woody Bioenergy” (BioRES). This project aims at developing Biomass Logistics and Trade Centres (BLTCs) in three countries, Serbia, Bulgaria and Croatia based on the best case practices already existing in Austria, Germany and Finland. This offers a great opportunity to learn more about the specificity of these developing bioenergy markets. AEBIOM had the opportunity to speak with Nikolay Kakanakov, Vice-President of BGBIOM regarding the current status of the bioenergy sector in Bulgaria:

  • What is the general situation of bioenergy in Bulgaria ? What are the future trends?

The bioenergy markNikolay Kakanakovet in Bulgaria has been influenced by through joining the EU ten years ago. Many projects were implemented for producing electricity through RES. Hydro-power, solar power and wind power were the main pillars of the Bulgarian implementation of EU targets. Several heat plants and CHP were implemented that use biogas from cattle manure, wood residues or municipal waste, but most of these are currently implemented as pilot projects. The renewable energy targets for 2020 for Bulgaria (16%) were achieved in 2012 with solar, wind and water power plants and in 2013 the target was exceeded to a 19% share. The general public is unhappy as the feed-in tariffs for RES have led to an increase in the price of electricity and this has had political consequences. There are still feed-in tariffs for electricity from biomass (including wood) but there is increasing discontent that the high electricity prices are due to these feed-in tariffs. The feed-in tariffs for electricity from woody biomass were decreased by 27-35% in the last year.

On the other hand, the use of woody biomass for household and small hotels in rural areas is traditionally more than 60% for regions with high levels of forested areas (e.g. mountains). The use of firewood for heating in villages has not been supported by national programmes, but it remains the most economically attractive. In the rural areas, local people have the right to buy 10 m3 of logged wood from local state forests at a special price (it can be 2, 3, or 4 times cheaper than the market price, depending on the year and the forest status). This is not considered as bioenergy support but as a social benefit.

In recent years, within larger cities, the use of pellets as a source for heating of family homes and households has increased significantly. The main reason is that it is cheaper and more effective than electricity, while also being cleaner than firewood and coal. And as an additional benefit – it is a more reliable energy source than natural gas, which is imported from politically unstable regions. The main problem remains the need for relatively high initial investment costs for the boiler, pipes and heat exchangers. Last year the bank lines that support energy efficiency have added pellet installations as eligible for credit.

  • Why did BGBIOM decide to engage in the development of bioenergy projects such as BioRES? Why did you consider that Biomass Logistics and Trade Centres (BLTCs) could be a replicable concept in Bulgaria?

BGBIOM was created to support projects in the field of bioenergy and biomass. It promotes all types of biomass, plant residues and animal manure as energy sources for a sustainable society. BGBIOM has been implementing EU projects in the bioenergy field for 20 years. Working on these projects, we have seen many examples and best practices in many European countries, while we have met many people and organisations within the country, understanding their concerns and expectations. Therefore, there was no hesitation in participating in a new bioenergy project – that is what we do and that is what our partners expect from us. We believe that the future of the Bulgarian energy sector relies on bioenergy and sustainability.

The BLTC concept, when adequately applied, can be a win-win situation for forest owners, wood-processing companies and consumers. In many forest rich regions the raw material is exported without much added value for the region, leaving an increasing local demand with an irregular supply. Firstly, implementing local hubs, which would make strategic local connections, would better satisfy local demand and would make the work of suppliers easier. The second positive effect could be the improvement of the image of wood bioenergy by proving the sustainability of forest management and showing a transparent wood supply chain – the use of wood for heating will not lead to the over-exploitation of our forests. The third, and maybe the most important, reason for promoting the BLTC concept is the social factor – bioenergy from the region for the region – will allow more of the added value to remain in the regions. People living in areas of abundant natural resources should not be poor and should have regular employment (which is not the case in many rural areas).

  • Which kind of industries could benefit the most from a stronger bioenergy sector in Bulgaria?

At the moment the instant benefit will be for households and small hotels as they need relatively cheap, sustainable and reliable sources of heating energy. The only competitor for heating a small hotel is natural gas, but this means dependence on one supplying company for distribution and the source of this gas is unreliable, remote and sometimes monopolistic. In the near future if the bioenergy market matures and becomes more predictable, food & beverage producing factories (small or medium-scale) can benefit from this. Nevertheless, the main beneficiaries will be the energy producers as they expand their business and end users if energy prices fall with market development.

  • What are the next steps for BGBIOM with regards to the creation of BLTCs?

Until now priority locations have been analysed and selected, stakeholders and investors identified, with some of them having been trained to create and run a BLTC sustainably. The process of establishing trust between important players in all selected locations is ongoing but mostly done – municipalities, forest owners, forest regulatory agencies, wood harvesting and wood processing companies, pellet producers and so on. The process of Consumer awareness-raising is currently ongoing – it started with the beginning of the project, but the main events are happening this summer or are planned for the autumn of 2016. BGBIOM has organised several events to inform consumers of the benefits of local BLTCs – how the use of local products benefits the local economy, what the benefits of the use of sustainable energy sources are, what quality parameters should be measured for wood bioenergy products, what potential sources of financing can be used for fuel-switching. The next steps in the implementation of BLTCs include further training of operators (if they are not trained already), providing model contracts for supply and sales, introducing and integration of Web Platforms for BLTCs (developed in the frame of BioRES). These steps should be taken in parallel with developing business plans for BLTCs and waiting for upcoming measures, which will support such bioenergy projects, to come into force through the Bulgarian government. Depending on national support and the parameters of bank credit lines, investors should decide what type of BLTC could be implemented – web-based, shop-based or one with its own production and transport.

For more information, visit BGBIOM’s website.

Interview conducted by Glen Wilson & Jean-Baptiste Boucher